BHP Billiton to Slash Workforce

Submitted by Share Trading on 21 January, 2009 - 14:54

BHP Billiton (BHP) has announced that it will cut about 6000 jobs globally due to the crises situation that prevails throughout the world. The miner made this announcement when it submitted the second quarter report for the financial year 2009. BHP has also revealed that it will suspend the Ravensthorpe nickel mine operation and will slash the output at Mount Keith mine in Western Australia, which will reduce its workforce by about 2100. Since starting, world nickel prices have plummeted, pressuring BHP and other miners on costs and prompting predictions that mines will decrease rather than increase output.

Reacting to the situation analyst James Wilson said, “They want to stay competitive and this is the way to do it - trim your employees and slow down your operations that are not profitable”. Rio Tinto, a rival company has embarked on a bid to reduce debt and conserve cash by cutting capital expenditure by up to $7.73 billion and axing about 14,000 jobs worldwide this calendar year amid the tough economic environment. Rio Tint last week reported an 18 percent decline in iron ore production for its fourth quarter and said earnings from its aluminum division would be hurt by falling prices.

BHP’s chief executive officer Alex Vanselow said, “These are very serious types of decisions and we don't take them lightly, but at the end they are necessary and they are the correct decisions”. Vanselow estimated the total job cuts will cost $500 million. With industrial activity worldwide slowing, analysts doubted the cuts to nickel output would be enough to turn prices around. Vanselow has said that reduction in the mining at the Mount Keith mine will not reduce the output. BHP’s second quarter report clearly says that production of iron ore rose 5 percent over the same quarter a year earlier, while oil output rose 30 percent. Output of aluminum fell 8 percent and copper 11 percent.